Company Continues to See FY2024 Revenues of
$900-930 Million and AOI of
$160-$170
Million(1)
Company Updates FY2024 Operating Income
Range to $85-$95 Million(2)
On Track to Deliver Low Double-Digit
Percentage Increase in Bookings Events in FY2024
Due to Strong Demand, Two Shows Added to
Upcoming Christmas Spectacular Run, Bringing Total to 187
Shows
NEW
YORK, Nov. 7, 2023 /PRNewswire/ -- Madison
Square Garden Entertainment Corp. (NYSE: MSGE) ("MSG Entertainment"
or the "Company") today reported financial results for the fiscal
first quarter ended September 30, 2023.
The fiscal 2024 first quarter marked the start of MSG
Entertainment's first full fiscal year as a standalone public
company. The Company continues to see its bookings calendar for the
remainder of fiscal 2024 fill up and remains on track to achieve a
low double-digit percentage increase in events in its bookings
business for the fiscal year. Last month, the New York Knicks
and New York Rangers returned to the Madison Square Garden Arena
("The Garden") for the start of their 2023-24 regular seasons. Next
week, the Christmas Spectacular production returns to Radio
City Music Hall for its 90th holiday season. Given
strong overall demand for this year's production, the Company
recently added two performances to this year's run, for a total of
187 planned shows as compared to 181 shows in fiscal 2023.
Financial results for the fiscal 2024 first quarter reflect the
Company on a fully standalone basis. Results for the fiscal 2023
first quarter, which was prior to the spin-off from Sphere
Entertainment Co. ("Sphere Entertainment"), are presented in
accordance with generally accepted accounting principles ("GAAP")
for the preparation of carve-out financial statements. These prior
year results do not include all of the expenses that would have
been incurred by MSG Entertainment had it been a standalone company
for the period presented. Therefore, results for the fiscal 2024
first quarter are not fully comparable with results for the prior
year period.
For the fiscal 2024 first quarter, the Company reported revenues
of $142.2 million, a decrease of
$4.2 million, or 3%, as compared to
the prior year quarter. In addition, the Company reported an
operating loss of $33.4 million, an
increase of $22.1 million as compared
to the prior year quarter, and an adjusted operating loss of
$0.7 million, as compared to adjusted
operating income of $11.5 million in
the prior year quarter.(1)
Executive Chairman and CEO James L.
Dolan said, "We are seeing strong demand across our business
and are excited to welcome millions of guests to our venues in the
coming months, including for this year's Christmas
Spectacular. We are on the path to generating robust growth
this fiscal year and are confident that we are well positioned to
create long-term value for shareholders."
Results for the Three Months Ended September 30, 2023
and 2022:
|
|
Three Months
Ended
|
|
|
September
30,
|
|
Change
|
$ millions
|
|
2023
|
|
2022
|
|
$
|
|
%
|
Revenues
|
|
$
142.2
|
|
$
146.5
|
|
$ (4.2)
|
|
(3) %
|
Operating
Loss
|
|
$
(33.4)
|
|
$
(11.3)
|
|
$
(22.1)
|
|
(196) %
|
Adjusted Operating
(Loss) Income(1)
|
|
$
(0.7)
|
|
$
11.5
|
|
$
(12.2)
|
|
NM
|
|
Note: Amounts may not
foot due to rounding. NM — Absolute percentages greater than 200%
and comparisons from positive to negative values or to zero values
are considered not meaningful.
|
(1)
|
See page 3 of this
earnings release for the definition of adjusted operating income
(loss) ("AOI") included in the discussion of non-GAAP financial
measures.
|
(2)
|
The Company is updating
its fiscal 2024 guidance for operating income primarily due to the
impact of restructuring charges.
|
Summary of Reported Results of Operations for the Fiscal 2024
First Quarter
For the fiscal 2024 first quarter, the Company
reported revenues of $142.2 million,
a decrease of $4.2 million, or 3%, as
compared to the prior year quarter. Event-related revenues
decreased $8.3 million as compared to
the prior year period. This decrease primarily reflected a lower
number of concerts held at the Company's venues as compared to the
prior year quarter, partially offset by higher per-concert revenues
in the current year period. The prior year quarter benefited from a
significant number of concerts that were rescheduled from earlier
dates due to the COVID-19 pandemic. The overall decrease in
revenues was partially offset by a $2.7
million increase in revenues subject to the sharing of
economics with Madison Square Garden Sports Corp. ("MSG Sports")
pursuant to the Company's arena license agreements, primarily
reflecting higher suite license fee revenues, and other net
increases.
Fiscal 2024 first quarter direct operating expenses of
$101.7 million were essentially
unchanged as compared to the prior year quarter. Direct operating
expenses reflected higher expenses associated with the sharing of
economics with MSG Sports pursuant to the arena license agreements
of $2.4 million, as well as other net
cost increases, offset by lower event-related expenses of
$4.7 million.
Fiscal 2024 first quarter selling, general and administrative
expenses of $48.8 million increased
$8.7 million, or 22%, as compared
with the prior year quarter. The fiscal 2024 first quarter reflects
the results of the Company on a fully standalone basis. Results for
the fiscal 2023 first quarter reflect the allocation of corporate
and administrative costs based on the accounting requirements for
the preparation of carve-out financial statements. These results do
not include all of the expenses that would have been incurred by
MSG Entertainment had it been a standalone company in the prior
year period. This was the primary driver of the overall increase in
selling, general and administrative expenses, partially offset by
the impact of the Company's transition services agreement with
Sphere Entertainment Co.
Fiscal 2024 first quarter operating loss increased by
$22.1 million to a loss of
$33.4 million, and adjusted operating
income decreased by $12.2 million to
a loss of $0.7 million, both as
compared to the prior year quarter. The increase in operating loss
was primarily due to restructuring charges, higher selling, general
and administrative expenses, and the decrease in revenues. The
decrease in adjusted operating income was primarily due to higher
selling, general and administrative expenses and the decrease in
revenues.
Financial Guidance
The Company is reaffirming its
previously issued fiscal 2024 guidance for revenues and adjusted
operating income, while updating its guidance for operating income,
primarily due to the impact of restructuring charges. The Company
currently expects the following:
- Revenues of $900 million to
$930 million.
- Operating income of $85 million
to $95 million.
- Adjusted operating income of $160
million to $170
million(3).
Other Matters
During the fiscal 2024 first quarter,
the Company repurchased 3,525,314 shares of MSGE Class A common
stock. This included (i) the repayment of the $65 million delayed draw term loan facility,
including accrued fees and interest, from Sphere Entertainment Co.
with 1,922,750 shares of MSGE Class A common stock in August, and
(ii) the repurchase of 1,602,564 shares of MSGE Class A common
stock at a price of $31.20 per share,
for an aggregate purchase price of approximately $50 million, as part of the secondary
underwritten offering by Sphere Entertainment Co. in September.
Since becoming a standalone company in April
2023, the Company has repurchased 4,365,367 shares of MSGE
Class A common stock for an aggregate purchase price of
approximately $140 million, reducing
Class A shares outstanding by approximately 10%.
The Company remains focused on its capital allocation priorities
of opportunistically returning capital to shareholders and debt
paydown.
An updated version of the MSG Entertainment investor
presentation is now available at investor.msgentertainment.com.
(3) See appendix for a
reconciliation of operating income to adjusted operating income for
fiscal 2024 financial guidance.
|
About Madison Square Garden Entertainment
Corp.
Madison Square Garden Entertainment Corp. (MSG
Entertainment) is a leader in live entertainment, delivering
unforgettable experiences while forging deep connections with
diverse and passionate audiences. The Company's portfolio includes
a collection of world-renowned venues – New York's Madison Square Garden, The Theater
at Madison Square Garden, Radio City Music Hall, and Beacon
Theatre; and The Chicago Theatre – that showcase a broad array of
sporting events, concerts, family shows, and special events for
millions of guests annually. In addition, the Company features the
original production, the Christmas Spectacular Starring the
Radio City Rockettes, which has been a holiday tradition for 90
years. More information is available at
www.msgentertainment.com.
Non-GAAP Financial Measures
We define adjusted
operating income (loss), which is a non-GAAP financial measure, as
operating income (loss) excluding (i) the impact of non-cash
straight-line leasing revenue associated with the arena license
agreements with MSG Sports, (ii) depreciation, amortization and
impairments of property and equipment, goodwill and other
intangible assets, (iii) share-based compensation expense or
benefit, (iv) restructuring charges or credits, (v) merger,
spin-off, and acquisition-related costs, including litigation
expenses, (vi) gains or losses on sales or dispositions of
businesses and associated settlements, (vii) the impact of purchase
accounting adjustments related to business acquisitions, (viii)
gains and losses related to the remeasurement of liabilities under
the executive deferred compensation plan, and (ix) amortization for
capitalized cloud computing arrangement costs. We believe that
given the length of the arena license agreements and resulting
magnitude of the difference in leasing revenue recognized and cash
revenue received, the exclusion of non-cash leasing revenue
provides investors with a clearer picture of the Company's
operating performance. We believe that this adjustment is
beneficial for other incremental reasons as well. This adjustment
provides senior management, investors and analysts with important
information regarding a long-term related party agreement with MSG
Sports. In addition, this adjustment is included under the
Company's debt covenant compliance calculations and is a component
of the performance measures used to evaluate, and compensate,
senior management of the Company. We believe that the exclusion of
share-based compensation expense or benefit allows investors to
better track the performance of the various operating units of our
business without regard to the settlement of an obligation that is
not expected to be made in cash. We eliminate merger, spin-off, and
acquisition-related costs, when applicable, because the Company
does not consider such costs to be indicative of the ongoing
operating performance of the Company as they result from an event
that is of a non-recurring nature, thereby enhancing comparability.
In addition, management believes that the exclusion of gains and
losses related to the remeasurement of liabilities under the
executive deferred compensation plan, provides investors with a
clearer picture of the Company's operating performance given that,
in accordance with U.S. generally accepted accounting principles,
gains and losses related to the remeasurement of liabilities under
the executive deferred compensation plan are recognized in
Operating (income) loss whereas gains and losses related to the
remeasurement of the assets under the executive deferred
compensation plan, which are equal to and therefore fully offset
the gains and losses related to the remeasurement of liabilities,
are recognized in Other income (expense), net, which is not
reflected in Operating income (loss).
We believe adjusted operating income (loss) is an appropriate
measure for evaluating the operating performance of the Company on
a consolidated and combined basis. Adjusted operating income (loss)
and similar measures with similar titles are common performance
measures used by investors and analysts to analyze our performance.
Internally, we use revenues and adjusted operating income (loss) as
the most important indicators of our business performance, and
evaluate management's effectiveness with specific reference to
these indicators. Adjusted operating income (loss) should be viewed
as a supplement to and not a substitute for operating income
(loss), net income (loss), cash flows from operating activities,
and other measures of performance and/or liquidity presented in
accordance with GAAP. Since adjusted operating income (loss) is not
a measure of performance calculated in accordance with GAAP, this
measure may not be comparable to similar measures with similar
titles used by other companies. For a reconciliation of operating
income (loss) to adjusted operating income (loss), please see page
6 of this release.
Forward-Looking Statements
This press release may
contain statements that constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance or results and
involve risks and uncertainties, and that actual results,
developments or events may differ materially from those in the
forward-looking statements as a result of various factors,
including financial community perceptions of the Company and its
business, operations, financial condition and the industries in
which it operates and the factors described in the Company's
filings with the Securities and Exchange Commission, including the
sections titled "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
contained therein. The Company disclaims any obligation to update
any forward-looking statements contained herein.
Contacts:
Ari Danes,
CFA
Senior Vice President,
Investor Relations, Financial Communications &
Treasury
Madison Square Garden
Entertainment Corp.
(212)
465-6072
|
Justin
Blaber
Vice President,
Financial Communications
Madison Square Garden
Entertainment Corp.
(212)
465-6109
|
Grace
Kaminer
Vice President,
Investor Relations & Treasury
Madison Square Garden
Entertainment Corp.
(212)
631-5076
|
Conference Call Information:
The conference call
will be Webcast live today at 10:00 a.m.
ET at
investor.msgentertainment.com
Conference call
dial-in number is 888-660-6386 / Conference ID Number
8020251
Conference call replay number is 800-770-2030 /
Conference ID Number 8020251 until November
14, 2023
MADISON SQUARE
GARDEN ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF
OPERATIONS
(in thousands,
except per share data)
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
2023
|
|
2022
|
Revenues
|
|
$
142,212
|
|
$
146,452
|
Direct operating
expenses
|
|
(101,677)
|
|
(101,662)
|
Selling, general, and
administrative expenses
|
|
(48,822)
|
|
(40,114)
|
Depreciation and
amortization
|
|
(13,585)
|
|
(15,985)
|
Restructuring
charges
|
|
(11,553)
|
|
—
|
Operating
loss
|
|
(33,425)
|
|
(11,309)
|
Interest
income
|
|
851
|
|
1,510
|
Interest
expense
|
|
(14,287)
|
|
(11,427)
|
Other (expense)
income, net
|
|
(4,469)
|
|
886
|
Loss from operations
before income taxes
|
|
(51,330)
|
|
(20,340)
|
Income tax
benefit
|
|
659
|
|
2,066
|
Net loss
|
|
(50,671)
|
|
(18,274)
|
Less: Net loss
attributable to nonredeemable noncontrolling interest
|
|
—
|
|
(372)
|
Net loss attributable
to MSG Entertainment's stockholders
|
|
$
(50,671)
|
|
$
(17,902)
|
|
|
|
|
|
Loss per share
attributable to MSG Entertainment's stockholders:
|
|
|
|
|
Basic and
diluted
|
|
$
(1.00)
|
|
$
(0.35)
|
|
|
|
|
|
Weighted-average
number of shares of common stock:
|
|
|
|
|
Basic and
diluted
|
|
50,437
|
|
51,768
|
MADISON SQUARE GARDEN ENTERTAINMENT
CORP.
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS)
TO
ADJUSTED OPERATING INCOME (LOSS)
(in
thousands)
(Unaudited)
The following is a description of the adjustments to operating
loss in arriving at adjusted operating income (loss) as described
in this earnings release:
- Non-cash portion of arena license fees from MSG Sports. This
adjustment removes the impact of non-cash straight-line leasing
revenue associated with the arena license agreements with MSG
Sports.
- Depreciation and amortization. This adjustment eliminates
depreciation and amortization of property and equipment and
intangible assets in all periods.
- Share-based compensation. This adjustment eliminates the
compensation expense relating to restricted stock units and stock
options granted under the Company's Employee Stock Plan, Sphere
Entertainment's Employee Stock Plan, the Company's Non-Employee
Director Plan and Sphere Entertainment's Non-Employee Director Plan
in all periods.
- Restructuring charges. This adjustment eliminates costs related
to termination benefits provided to certain corporate executives
and employees.
- Merger, spin-off, and acquisition-related costs. This
adjustment eliminates costs related to mergers, spin-offs and
acquisitions, including merger-related litigation expenses, in all
periods
- Amortization for capitalized cloud computing arrangement costs.
This adjustment eliminates amortization of capitalized cloud
computing arrangement costs.
- Remeasurement of deferred compensation plan liabilities. This
adjustment eliminates the impact of gains and losses related to the
remeasurement of liabilities under the executive deferred
compensation plan.
|
|
Three Months
Ended
|
|
|
September
30,
|
$ thousands
|
|
2023
|
|
2022
|
Operating
loss
|
|
$
(33,425)
|
|
$
(11,309)
|
Non-cash portion of
arena license fees from MSG Sports(1)
|
|
(495)
|
|
(519)
|
Depreciation and
amortization
|
|
13,585
|
|
15,985
|
Share-based
compensation (excluding share-based compensation in restructuring
charges)
|
|
6,177
|
|
7,410
|
Restructuring
charges
|
|
11,553
|
|
—
|
Merger, spin-off, and
acquisition-related costs(2)
|
|
2,035
|
|
—
|
Amortization for
capitalized cloud computing arrangement costs
|
|
—
|
|
75
|
Remeasurement of
deferred compensation plan liabilities
|
|
(145)
|
|
(154)
|
Adjusted operating
(loss) income
|
|
$
(715)
|
|
$
11,488
|
_________________
|
(1)
|
This adjustment
represents the non-cash portion of operating lease revenue related
to the Company's Arena License Agreements with MSG Sports. Pursuant
to GAAP, recognition of operating lease revenue is recorded on a
straight-line basis over the term of the agreement based upon the
value of total future payments under the arrangement. As a result,
operating lease revenue is comprised of a contractual cash
component plus or minus a non-cash component for each period
presented. Operating income on a GAAP basis includes lease income
of (i) $829 of revenue collected in cash for the three months ended
September 30, 2023, and $805 of revenue collected in cash for
the three months ended September 30, 2022, and (ii) a non-cash
portion of $495 for the three months ended September 30, 2023,
and $519 for the three months ended September 30,
2022.
|
(2)
|
This adjustment
represents non-recurring costs incurred and paid by the Company for
the sale of the retained interest by Sphere Entertainment
Co.
|
MADISON SQUARE
GARDEN ENTERTAINMENT CORP.
|
CONDENSED
CONSOLIDATED AND COMBINED BALANCE SHEETS (unaudited)
|
(in
thousands)
|
|
|
|
|
|
September
30,
2023
|
|
June 30,
2023
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash, cash equivalents
and restricted cash
|
|
$
39,516
|
|
$
84,355
|
Accounts receivable,
net
|
|
100,203
|
|
63,898
|
Related party
receivables, current
|
|
47,445
|
|
69,466
|
Prepaid expenses and
other current assets
|
|
96,415
|
|
77,562
|
Total current
assets
|
|
283,579
|
|
295,281
|
Non-Current
Assets:
|
|
|
|
|
Property and equipment,
net
|
|
619,928
|
|
628,888
|
Right-of-use lease
assets
|
|
229,038
|
|
235,790
|
Goodwill
|
|
69,041
|
|
69,041
|
Intangible assets,
net
|
|
63,801
|
|
63,801
|
Other non-current
assets
|
|
83,150
|
|
108,356
|
Total
assets
|
|
$
1,348,537
|
|
$
1,401,157
|
LIABILITIES AND
DEFICIT
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts payable,
accrued and other current liabilities
|
|
$
187,187
|
|
$
214,725
|
Related party
payables, current
|
|
69,914
|
|
47,281
|
Long-term debt,
current
|
|
20,313
|
|
16,250
|
Operating lease
liabilities, current
|
|
38,211
|
|
36,529
|
Deferred
revenue
|
|
289,027
|
|
225,855
|
Total current
liabilities
|
|
604,652
|
|
540,640
|
Non-Current
Liabilities:
|
|
|
|
|
Long-term debt, net of
deferred financing costs
|
|
699,427
|
|
630,184
|
Operating lease
liabilities, non-current
|
|
213,020
|
|
219,955
|
Deferred tax
liabilities, net
|
|
22,900
|
|
23,518
|
Other non-current
liabilities
|
|
43,739
|
|
56,332
|
Total
liabilities
|
|
1,583,738
|
|
1,470,629
|
Commitments and
contingencies
|
|
|
|
|
Deficit:
|
|
|
|
|
Class A Common Stock
(a)
|
|
454
|
|
450
|
Class B Common Stock
(b)
|
|
69
|
|
69
|
Additional paid-in
capital
|
|
17,980
|
|
17,727
|
Treasury stock at cost
(4,365 and 840 shares outstanding as of September 30, 2023
and
June 30, 2023,
respectively)
|
|
(140,512)
|
|
(25,000)
|
Accumulated
deficit
|
|
(79,368)
|
|
(28,697)
|
Accumulated other
comprehensive loss
|
|
(33,824)
|
|
(34,021)
|
Total
deficit
|
|
(235,201)
|
|
(69,472)
|
Total liabilities and
deficit
|
|
$
1,348,537
|
|
$
1,401,157
|
_________________
|
(a)
|
Class A Common Stock,
$0.01 par value per share, 120,000 shares authorized; 45,468 and
45,024 shares issued as of September 30, 2023 and June 30, 2023,
respectively.
|
(b)
|
Class B Common Stock,
$0.01 par value per share, 30,000 shares authorized; 6,867 shares
issued as of September 30, 2023 and June 30, 2023,
respectively.
|
MADISON SQUARE
GARDEN ENTERTAINMENT CORP.
SELECTED CASH FLOW
INFORMATION
(in
thousands)
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
September
30,
|
|
|
2023
|
|
2022
|
Net cash provided by
(used in) operating activities
|
|
$
1,378
|
|
$
(57,326)
|
Net cash used in
investing activities
|
|
(55,490)
|
|
(1,036)
|
Net cash provided by
financing activities
|
|
9,273
|
|
102,096
|
Net increase (decrease)
in cash, cash equivalents and restricted cash
|
|
(44,839)
|
|
43,734
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
84,355
|
|
62,573
|
Cash, cash equivalents
and restricted cash, end of period
|
|
$
39,516
|
|
$
106,307
|
MADISON
SQUARE GARDEN ENTERTAINMENT
CORP. APPENDIX FISCAL 2024 FINANCIAL
GUIDANCE ADJUSTMENTS TO RECONCILE OPERATING INCOME
TO ADJUSTED OPERATING INCOME (in
millions)
|
|
|
|
Fiscal Year
2024
|
Operating
income
|
|
$85 - $95
|
Non-cash portion of
arena license fees from MSG Sports
|
|
(25)
|
Depreciation and
amortization
|
|
55
|
Share-based
compensation
|
|
30
|
Restructuring
charges
|
|
13
|
Merger, spin-off and
acquisition-related costs
|
|
2
|
Adjusted operating
income
|
|
$160 - $170
|
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SOURCE Madison Square Garden Entertainment Corp